Treasurys eke out no-decision

CBS.MarketWatch.com

NEW YORK (CBS.MW) -- Treasurys erased morning losses to close little changed Monday in a quiet session.

Weakness in U.S. stocks and a firmer dollar helped underpin government paper. At the same time, caution ahead of an important wage inflation report due Thursday and the second part of Alan Greenspan's Humphrey-Hawkins testimony on Wednesday curbed some players' appetite for bonds.

"There's little on which to trade," remarked John Canavan, Treasury analyst at Stone & McCarthy Research Associates.

The 30-year bond idled, to yield
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6.031 percent. The 10-year also stood unchanged, yielding
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5.844 percent. The 5-year lost 2/32 to yield 5.711 percent. The 2-year rose 1/32, to yield 5.557 percent. The discount rate on the 52-week bill rose 1 basis point at 4.77 percent. In the futures pit, the September T-bond was unchanged at 115-19.

The September fed funds contract now sees a 62 percent chance that the Fed will nudge up rates at the August 24 FOMC meeting.

"As has been the case recently, we're likely to see a moderate amount of corporate issuance this week," Canavan said. "But it hasn't been much of a factor Monday."

In economic news, June existing-home sales rose 10.6 percent to a 5.53-million-unit pace, a record. Most economists had forecast 5.50 million units. See full story.

Looking ahead, Thursday's release of the second-quarter employment cost index is particularly key. The index, a key gauge of labor costs, is one of Federal Reserve Chairman Greenspan's pet indicators.

Among other economic reports on tap later in the week: July consumer confidence on Tuesday, the advance reading of 2Q gross domestic product on Thursday, and June new home sales on Friday.

"Traders are concerned that the week's data will remain strong and will simply further fuel the fears of another tightening," said Canavan.

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